Mortgage rates turned in a mixed performance this week, and economists at two mortgage giants have different outlooks about where rates are headed. Meanwhile, mortgage activity picked up.
A mortgage loan that takes 30 years to pay off was going for 4.37 percent this week, according to Freddie Mac — which buys loans from mortgage lenders then sells them to investors. This week’s rate rose from last week’s record-low 4.35 percent.
In its economic forecast released this week, Freddie predicted that the 30-year will average 4.4 percent in the third quarter then steadily increase until the final quarter of next year — when it reaches 5.1 percent.
Fannie Mae, which competes with Freddie to buy loans from mortgage bankers, also predicted that the 30-year will be 4.4 percent this quarter, though Fannie’s outlook had the 30-year falling to 4.2 percent in the fourth quarter — where it is expected to stay most of next year.
The 30-year is unlikely to move much by the next set of reports based on the yield of the 10-year Treasury, which was unchanged Thursday from a week earlier at 2.77 percent, according to data reported by the U.S. Department of the Treasury.
The rate on the jumbo 30-year was 5.36 percent in the Mortech-Mortgage Daily Mortgage Market Index report for the week ended Wednesday, 0.12 percent worse than last week. At the same time, the conventional (non-jumbo) 30-year rate was up just 0.05 percent. The activity left jumbo mortgage more expensive this week relative to their conforming counterparts.
The average 15-year fixed-rate mortgage managed a small decline, edging down to 3.82 percent from a record -low 3.83 percent a week earlier, Freddie reported.
A more impressive showing was handed in by the one-year Treasury-indexed adjustable-rate mortgage. Freddie said the one-year fell 0.06 percent to 3.40 percent.
Freddie projected that the one-year will average 3.5 percent in the third and fourth quarters, while Fannie has the one-year falling from 3.6 percent to 3.3 percent in the fourth quarter.
Borrowers who were refinancing represented 61 percent of activity in the Mortgage Market Index report, slightly higher than 60 percent last week.